Calgary Office Market Report

What’s the scoop?

Positive absorption streak stalls in Q4. Bright spots remain, however.

The fourth quarter of 2022 capped off one of the strongest leasing environments the Calgary office sector has seen in years. A year long streak of positive absorption activity for the overall market came to an end, however, with a negative 120,519 square feet of absorption recorded in Q4. Much of the gain the market experienced this quarter was offset by major downtown tenants in the energy industry “right-sizing” their operations.

Positive momentum was also the story for outside of downtown, with suburban markets recording a seventh straight quarter of positive activity. In addition, the overall office market experienced a positive absorption of 131,820 square feet throughout the year.

Bracing for the storm

Much of the last 6 months had a negative cloud over it with an anticipated recession coming. Thankfully it did not arrive as Canada’s economy experienced a modestly positive Q4. The clouds, however, have not gone away as we head into the new year. Many industry experts are predicting a slow down for the entire CRE sector in 2023 with investment levels anticipated to be in flux amidst an environment of fiscal restraint.

Given this, Calgary still appears to have the right fundamentals to perform well compared to other areas of the country. The strong environment for commodity prices is predicted to remain elevated for some time to come, creating a favorable environment for our economy. The strength of the city’s industrial, residential, and land sectors will continue to bring investment and relocation to the market.

Our point of view.

This was a year where the picture became much clearer with regards to the shape of the recovery from the pandemic and another test of the Calgary commercial market’s resiliency in the face of economic hardship. A strong rise in office leasing activity was a win for Calgary’s economy this year. We’ve also been reminded that the future is anything but certain, with challenges facing us on the local, national, and international scales.